Etihad will launch roadshow to finance new fleet

Etihad Airways, which has just become profitable in its eighth year of operations, will soon launch a roadshow to raise funds to finance new aircraft purchases, James Hogan, President and Chief Executive, said. The airline expects to hit the $5 billion (Dh18.3 billion) revenue mark this year. Etihad, which has a fleet of 65 aircraft, is one of the world's fastest growing airlines and has more than 100 aircraft on firm order. "We have a financing roadshow coming up in New York and London for a further fundraising exercise," he said. "We work closely with a group of 40 global banks. So far we have raised $5 billion in financing for our aircraft. We have a strong business plan in place for the airline's growth and we are very comfortable with that." Acquisitions In an interview, Hogan — the ‘turnaround guru' who has turned around two loss-making carriers — Gulf Air and Etihad Airways - told Gulf News that he is not looking at further acquisitions after acquiring a 29 per cent stake in airberlin, Europe's sixth biggest airline, and a 40 per cent stake in Air Seychelles recently. "No, we are not looking at any more acquisitions. We already have our plate full," Hogan said. The airline yesterday announced a $14 million profit, making it profitable for the first time since its launch in November 2003. "We are on track towards a road of sustainable profitability and we will build our future towards a sustainable profitability," he said, reiterating that sustaining profits will be his game plan going forward. "We have achieved $4.1 billion revenue last year and our target is to achieve $5 billion this year. As we move forward, we continue to strengthen operational efficiency that will help our airline's bottom line. "With our relationship with airberlin, we are going to synergise our strengths and help both grow. With airberlin we are looking at a further $200 million cost savings." Despite the success, he said, challenges remain, including oil prices and regional issues. The GCC carriers have suffered due to the Arab Spring which forced some airlines to cancel flights to the troubled cities. In many cases, passenger flow dropped on those routes during the crises. "We have cruised through a lot of challenges, be it high oil prices or freezing up of Heathrow Airport or the Arab Spring. We are a global airline and we are accustomed to these short-term challenges." Etihad became the third UAE and Gulf airline — after Emirates and Air Arabia — to become profitable, despite challenging market conditions. Business plan "While Etihad's goal was just to break even, attaining a small but important profit shows that its business plan is paying off, even though it has spent heavily on investing in other airlines," Saj Ahmad, chief analyst at the UK-based FBE Aerospace, said. "Further, with a sharp rise in earnings, with continued rises in passenger demand, Etihad will experience further growth in revenue which will ultimately drive profits in future years, despite pressures of fuel and labour costs as it adds new destinations. Gulf airlines, including flyDubai, Qatar Airways and Oman Air, are growing at a faster pace that is driving the growth in the region's aviation industry. "What it also highlights to great effect is that there is ample demand being shared between Dubai, Abu Dhabi and Doha, therefore the argument that there is too much capacity in the GCC simply isn't true. "And with airberlin and Air Seychelles to deliver significant revenue returns in the coming years, Etihad's growth in revenue and earnings year-on-year will continue to rise in line with passenger demand as the carrier expands its global footprint," Ahmad says. "In 2004 Middle East and North African carriers accounted for less than 7 per cent of international traffic. Today it is over 11 per cent," Tony Tyler, IATA's director general and CEO, said at a recent conference in Abu Dhabi. "The double digit growth trend of Middle East carriers over the last years has fuelled this expansion. That has slowed this year. Over the first 10 months of 2011 Middle East carriers added 8.8 per cent to capacity while demand grew by 8.0 per cent. But the future for this region remains bright."